Failure to pay correct Court fee leads to strike-out

Mr C claimed that he was injured as a result of a fall in a pub in November 2012. Proceedings were issued by Mr C four days before limitation expired in November 2015. The Statement of Value on the Claim Form limited the claim to £10,000 and the relevant court fee of £455 was paid.

When proceedings were served 4 months later, the Claimant’s Schedule of Loss included loss of earnings of £40,000. The Court fee for such a claim would have been in excess of £2,000. Following advice from Counsel, the Defendant applied to strike out the claim as an abuse of process, relying on the recent decision of Lewis v Ward Hadaway, click here for Chambers article relating to the case.

Unlike some of the cases in Lewis, the claim was issued by the Court within the limitation period and therefore the limitation argument that was applied in Lewis to grant summary judgment on 11 of the cases was not available to the Defendant.

Two issues therefore arose:

Was the Claimant’s conduct an abuse of process?

If so, was it appropriate to strike out the claim as a result?

Abuse of process

Like Lewis, the judge accepted that the Claimant’s conduct was an abuse of process as a result of artificially understating the value of the claim at issue:

The loss of earnings claim was for a period of 40 weeks immediately after the alleged accident when the Claimant claimed he was unable to work. The period of loss had therefore come to an end more than 2 years before the claim was issued;

One week before issue the Claimant’s solicitors had written a letter to the Defendant stating “…on the basis of information presently available and in order to keep Court fees to a minimum, we propose to provisionally assess quantum so as not to exceed £10,000” whilst reserving the right to claim a higher amount. The letter sought the Defendant’s agreement (even though at that stage no medical evidence or other evidence of quantum had been served) and stated that if the Defendant objected the Claimant would pay a higher Court fee.

The Claimant filed no evidence in response to the Defendant’s application and, in particular, provided no explanation for the contents of the letter or when the solicitors became aware of the Claimant’s loss of earnings claim.

In the absence of witness evidence in response and taking into account the contents of the letter and the duration since the loss of earnings had allegedly been incurred, the judge inferred that the loss of earnings claim was known at the time of issue and that, like Lewis, a scheme had been operated to pay a lower Court fee.

Strike out

Having decided that the issuing of the claim with an artificially low statement of value was an abuse of process the judge considered whether the claim should be struck out as a result. In Lewis, the judge had decided that it was not proportionate to strike out the claims.

Counsel for the Defendant successfully argued that the present case could be distinguished from Lewis because:

In Lewis, the Claimants’ solicitors had been transparent in pre-action correspondence in stating the true value of the claim. In the present action the Claimant’s solicitors had given no indication of the value of the claim, other than in the misleading letter a week before issue that the value did not exceed £10,000;

In Lewis, the application to strike out was made relatively late in proceedings and substantial amounts of work had been undertaken between the time that the abuse of process had become apparent and the application to strike out. In the present case, the issue of the abuse was raised in the Defence and the application to strike out was made at the same time as service of the Defence;

In Lewis, the Defendant had the benefit, in some of the cases, of being able to argue the limitation issue. The limitation issue did not arise in the present case;

In Lewis, the Claimants had amended the Statement of Value and paid the correct fee prior to service of proceedings thereby “remedying” the abuse. In the present case the Claimant had made no application to amend the Statement of Value or pay the correct fee, even at the date when the strike out application was heard and had served no evidence to explain why.

The judge therefore held that it was proportionate to strike out the claim as an abuse of process and also ordered that the Claimant pay the Defendant’s full costs of the action. Having been struck out as an abuse of process the costs order is enforceable without further order of the Court.

It needs to be recognised that the circumstances of this case leading to strike out were fact specific and such an application is unlikely to be appropriate in every case where the incorrect Court fee has been paid.

Richard Paige was instructed by DWF (London) to draft the Defence to the claim and advised the Defendant to make the application to strike out. He also represented the Defendant at the strike out application hearing.

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